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South African
Political
Outlook 2020
Simon Freemantle
Standard Bank
10 February 2020
SA Politics in 2020 – a balancing act
In providing structural economic The year ahead may be a defining one politically. A relatively rare election-free
steer, President Ramaphosa will need calendar (Table 1) may allow a more assertive stance from government in resolving
to carefully balance competing and some of the country’s pressing structural challenges. Yet, in providing such steer,
often conflicting interests from the President Ramaphosa will need to carefully balance competing, and often conflicting,
various stakeholders that he has since interests from the various stakeholders – in the ANC, government, business, civil
his election as party leader in society, and the labour movement, amongst others – that he has since his election as
December 2017 sought so routinely party leader in December 2017 sought so routinely to placate.
to placate
Table 1: Key elections
2019 2020 2021 2022 2023 2024
National and Nothing Local ANC elective Nothing National and
provincial scheduled Government conference (Dec) scheduled provincial
elections Elections (likely elections
Aug/Sep)
Source: Standard Bank Research
It is likely that the president will continue to err on the side of caution in this
regard, offering incremental – though still meaningful – progress on matters
related to economic policy and SOE restructuring. Critical trade-offs will likely
become more apparent in 2020: though government is unwilling to consider meaningful
job cuts at, or direct privatisation of, Eskom, it is nonetheless pushing forward with the
utility’s unbundling and is evidently intent on supporting the deregulation of the energy
sector, thus enabling far stronger private sector participation in electricity generation in
order to alleviate the damaging effects of load-shedding on growth and confidence.
From a managerial perspective, some progress this year can also be expected at key
SOEs such as Eskom (which has a new CEO and chairperson); SAA (which was placed
into business rescue late last year); and Prasa (which has been placed under
administration).
The effects on the public mood of The effects on the public mood of another lacklustre year economically will be
another lacklustre year economically somewhat softened by the ongoing and important institutional rebuilding of
will be somewhat softened by the critical Anti-Corruption Task Team (ACTT) institutions this year. Focus in this
ongoing and important institutional regard will fall on the National Prosecuting Authority’s Investigative Directorate, which
rebuilding of critical Anti-Corruption in December last year arrested a group of former Eskom executives related to an
Task Team institutions this year allegedly improper contract at the Kusile power station. The Directorate has also
announced that it has concluded its forensic investigation into the Gupta-linked Estina
Dairy Farm project and that it will soon formalise charges in relation to this
investigation. It is plausible that the Special Investigative Unit (SIU) will conclude its
interrogation of various potentially irregular (and state capture related) contracts signed
by Eskom and Transnet executives this year, too. Here, public interest will perhaps rest
most squarely on Eskom’s facilitation of the Gupta family’s purchase of Glencore’s
Optimum coal mine in 2016. These developments will bolster the, already visible, signs
of institutional regrouping that emerged in 2019 from ACTT institutions. Here, the
president’s thorough ‘due process’ approach towards governance reform is having an
unambiguously positive effect in shoring up institutional credibility and closing the
avenues for reprisal for those most directly threatened by the state’s ethical
recalibration.
Within the ANC, a dense calendar of potentially shaping party elections and
events this year presents the opportunity for President Ramaphosa’s currently
firm grip on power within the party to be either further shored up or diminished.
The president enters the year in a position of political strength, based on the support he
holds within the majority of ANC provinces and across its alliance partners, and as a
function of the systematic manner in which former president Zuma’s party power base
has been dismantled – and its access to patronage diminished – over the past two years.
Nonetheless, the factional sway of influence in the ANC is never static, and it could be
reshaped this year should the president’s adversaries secure a new institutional foothold
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Standard Bank
10 February 2020
around which they can frame their battle against his reform initiatives and so potentially
weaken his 2022 re-election aspirations. Here, the focus will rest on the National
General Council (NGC) in June, during which ANC members will discuss the leadership’s
progress in implementing its 2017 resolutions; as well as on seven potentially vital party
elections scheduled for 2020. These are for new leadership of the ANC Youth League;
the ANC Women’s League; the ANC’s provincial leadership in Mpumalanga, the North
West and the Western Cape; and for new regional leadership in eThekwini (which in
large part shapes the balance of power in KZN), and OR Tambo in the Eastern Cape.
Table 2: ANC provincial election schedule
Province Current chairperson Current premier Share of ANC m/ship (2017) Next provincial election
Eastern Cape Oscar Mabuyane Oscar Mabuyane 13.7% 2022
Free State Sam Mashinini Sisi Ntombela 8.6% 2023
Gauteng David Makhura David Makhura 10.7% 2023
KZN Sihle Zikalala Sihle Zikalala 18.4% 2023
Limpopo Stan Mathabatha Stan Mathabatha 13.6% 2023
Mpumalanga Mandla Ndlovu (acting) Refilwe Mtsweni-Tsipane 15.6% 2020 (scheduled for March)
Northern Cape Zamani Saul Zamani Saul 4.2% 2022
North West Vacant (led by task team) Job Mokgoro 11.4% 2020
Western Cape Vacant (led by task team) Alan Winde (DA) 3.8% 2020
Source: Standard Bank Research; ANC
Elsewhere, focus will undoubtedly rest on several key legal and constitutional
battles this year. Most prominently, the year may see the first amendment to the
Constitution’s Bill of Rights, provided the ANC is successful in nudging through its
proposed amendments to Section 25 to more “explicitly” enable the expropriation of
land without compensation. Various opposition political and civil society groupings are
already gearing up to challenge the constitutionality of the ANC’s approach in this
regard, as well as with other recent legislative amendments by government, such as the
Traditional and Khoi San Leadership Act and the recently gazetted amendments to the
Refugee Amendment Act. These challenges – particularly to the amendment of Section
25 – will very likely delay the process of change.
Several politically shaping court processes are likely to play out in the year ahead,
too. Of central focus will be the separate reviews by President Ramaphosa and Minister
of Public Enterprises Pravin Gordhan into the adverse findings against them by Public
Protector Busisiwe Mkhwebane. Adv. Mkhwebane’s tenure will also be formally tested
by the parliamentary proposal to remove her that was initiated by the Democratic
Alliance (DA) last year, and which will be debated in the National Assembly in 2020.
Both Economic Freedom Fighters (EFF) President Julius Malema and his deputy Floyd
Shivambu will face separate charges in court this year, too, the outcomes of which may
imperil their ability to remain members of parliament.
From a labour relations perspective, From a labour relations perspective, focus in terms of the scheduled collective
focus in terms of the scheduled bargaining processes in 2020 will fall on negotiations in the coal sector (where
collective bargaining processes in the NUM is the dominant union) and in the metals and engineering industry
2020 will fall on negotiations in the (where NUMSA is dominant) given the expiry of both deals at the end of June.
coal sector and in the metals and Aside from this, tense public sector wage talks will likely begin towards the end of the
engineering industry given the expiry year, with unions likely battling to secure above-inflation gains given the profound fiscal
of both deals at the end of June constraints that government faces. More broadly, organised labour will attempt to
regroup in the years ahead after a bruising previous decade. While COSATU will
continue to seek influence through the tripartite alliance and based on its relationship
with President Ramaphosa, other unions and federations (such as AMCU, NUMSA and
SAFTU) may look to build new political affiliations – potentially with the EFF – in order
to elevate their national voice.
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Standard Bank
10 February 2020
Table 3: Collective wage negotiations
Sector Main union(s) + Most recent wage deal Expiry of current
federation struck agreement
Automotive NUMSA (SAFTU) 2019 30 June 2022
(manufacturing)
Automotive (retail) NUMSA (SAFTU) 2016 Still in negotiations for a
new three-year deal
Chemicals CEPPWAWU (COSATU) 2019 30 June 2021
Gold NUM (COSATU); AMCU 2018 30 June 2021
(NAFTU)
Platinum AMCU (NAFTU) 2019 30 June 2022
Coal NUM (COSATU) 2017 30 June 2020
Public sector Various, mostly COSATU or 2018 30 March 2021
FEDUSA affiliated
SALGA (local SAMWU (COSATU) 2018 30 June 2021
government)
Metal and Engineering NUMSA (SAFTU) 2017 30 June 2020
Eskom NUM (COSATU); NUMSA 2018 30 June 2021
(SAFTU); Solidarity
Source: Various media reports and union/employer statements; Andrew Levy Employment; Standard Bank Research
Within the opposition, in 2020 the DA will look to regroup after a disastrous
2019. The focus for the party will be in shoring up its conservative minority core
through the election of new leadership in May, and the tabling of firmer resistance to
ANC and government policies such as land expropriation and National Health Insurance.
For its part, the EFF will focus in 2020 on defending its president and deputy president
from prosecutorial action; sowing and then benefiting from factional rifts in the ANC;
and securing new ‘leftist’ alliances within the trade union movement to elevate its
national appeal. Both the EFF and DA (as well as other opposition parties) will also seek
to renegotiate the alliances that were disrupted last year in metros such as Nelson
Mandela Bay and Tshwane.
Concluding remarks. We expect mixed political economy progress in 2020: reform at
Eskom and across other troubled SOEs will be incremental rather than decisive and
contentious, with the associated risk that socio-economic tensions compound over the
medium term and complicate the policy environment in the 2021 local government
elections, the 2022 ANC leadership elections, and the 2024 national and provincial
elections. However, the president’s cautious demeanour is being far more positively
reflected in both the prospects for ongoing anti-corruption momentum from institutions
such as the SIU, the Hawks and the NPA, and in the rebalancing of power in his favour
(and/or in the favour of institutional ‘unity’) in the ANC. In these two areas we expect
that the year will end with firmer confidence on the state’s governance reboot and on
President Ramaphosa’s capacity to secure re-election as party president in 2022.
Similarly, it can be expected that the courts to again hold the line in the year ahead on
matters of primary political and/or constitutional importance, in so doing emphasising
the profound role the judiciary – as well as the civil society organisations that represent
groups affronted by potentially unlawful and unconstitutional government action –
plays in defining South Africa’s
Simon Freemantle
Analyst certifications and important disclosures are in the disclosure appendix. For other important disclosures, please refer to the
disclosure & disclaimer at the end of this document.
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Standard Bank G10 | FX & Fixed income
10 February 2020
*Analyst Certification and Important Disclosures
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expressed in this research report accurately reflect the research analyst's(s') personal views about the subject matter investment(s) and
issuer(s) and (ii) no part of the analyst’s(s’) compensation was, is or will be directly or indirectly related to the specific recommendations
or views expressed by the analyst(s) in this research report. Standard Bank research analysts receive compensation that is based, in part,
on the overall firm revenues, which include investment banking revenues.
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